Stake Auction AMO

For OTOKEN variants that leverage a stakable base token (like ADA for OADA), the Stake Auction AMO opens up new avenues for yield generation. It allows external parties to rent staking power for a limited time in exchange for a fee, turning idle staking capacity into a revenue stream for the system.

Key Features

Leveraging Staking

Temporarily granting someone else the right to use a base token’s staking power lets the system earn a return without permanently losing access to its liquidity.

Bidding & Allocations

Users who want to borrow stake submit bids specifying the APY they’re willing to pay and the total amount they need. The system matches these bids with available staking capacity. After the epoch snapshot, the lending arrangement ends, and the OTOKEN reclaims its staking power.

Trade-Offs & Liquidity Management

To fulfill a stake auction, an OTOKEN may need to pull liquidity from the DEX AMO temporarily. While this can increase system yield, it temporarily reduces liquidity available for OTOKEN redemption. Careful calibration ensures that the system doesn’t sacrifice too much liquidity and compromise price stability.

Stake auctions unlock additional revenue streams for sOTOKEN holders and the DAO, all while leveraging existing ecosystem features like staking. This form of yield generation adds depth to the system’s portfolio and can boost long term sustainability.